New Orleans City Council is next, possibly last, step for sewer, water rate increase

While the Sewerage & Water Board's plan to increase service rates received a mostly warm welcome in the City Council chamber Wednesday, a few in attendance worried it would unfairly strain the wallets of low-income residents and water-guzzling businesses. The council's Budget Committee endured more than four hours of questions, comments and almost a few tears before voting 2...

While the Sewerage & Water Board's plan to increase service rates received a mostly warm welcome in the City Council chamber Wednesday, a few in attendance worried it would unfairly strain the wallets of low-income residents and water-guzzling businesses. The council's Budget Committee endured more than four hours of questions, comments and almost a few tears before voting 2 to 1 to send the plan to the full council Thursday. If it passes that final hurdle, ratepayers will see their water and sewer rates jump 10 percent every year for the next eight years.

Councilwoman Stacy Head, who fought throughout the meeting to ask what she described as three pages of questions, was the lone standout to vote against her two colleagues, Committee Chairwoman Jackie Clarkson and Councilwoman Cynthia Hedge-Morrell. Although only three sit on the committee, all seven council members showed up Wednesday.

New Orleans City Councilwoman Stacy Head Ted Jackson, The Times-Picayune archive

Under the plan, an average family of four will see its rates jump from $52.50 a month in 2012 to $112.67 in 2020, or about $727 more a year when the increases are finished. Likewise, a mid-sized business that uses 374,000 gallons of water a month will see its rates rise from $2,955.66 a month in 2012 to $6,336.05 in 2020, adding at the end $40,565 a year to its bill.

Helen LeBourgeois, who owns TLC Linen Services, called the proposal "backbreaking." Describing herself as a heavy water user, she estimated her business will be paying $225,000 more every year after the new rates are fully implemented.

But very few audience members or city and water board officials called the annual upticks unnecessary. Almost all agreed the S&WB's ancient networks of underground pipes are crumbling; its power plant is failing; its employee ranks are grossly understaffed; it's risking defaults on its debts and it is coming perilously close to missing at least two repair deadlines in a 2010 federal consent decree to repair the sewer system.

S&WB officials estimate they need $3.3 billion to fully fix the water board's infrastructure. The plan's supporters, including Mayor Mitch Landrieu, have estimated it will drive 26,000 new construction jobs into the city and add 186 new permanent positions to the S&WB.

Tied to the rate increases are plans to revamp the governance of the 13-member board in an attempt to diminish the politics that have plagued the board and make the proposal more palatable to a skeptical public. Board membership would drop to nine, leaving the mayor, two members of the Board of Liquidation, the city's debt manager, and six mayor-appointed seats. Gone would be the three seats reserved for council members and one mayoral appointment. All appointees would be limited to two terms.

<a href="http://polldaddy.com/poll/6745043/">What should the New Orleans City Council do about the S&WB rate increase request?</a>

Deputy Mayor Cedric Grant, who often stands in for Landrieu on the S&WB, said the repairs would let the water board save money by closing leaks that release 40 percent of the system's water supply every day. And he entertained selling more water to New Orleans' neighboring parishes and cities -- business deals he said could have the city lowering its rates in the future.

"Eventually, I hope that we would, because we have the capacity to do much more with the system than what we have done," Grant said.

A parade of business and community leaders, including the Business Council, the New Orleans Chamber of Commerce, Ron Forman of the Superdome Commission and the Greater New Orleans Hotel & Lodging Association, approached the council chamber's microphone to support the plan.

Trying to answer lingering questions about how the new money would be spent, S&WB Deputy Executive Director Robert Miller divvied up the $582.7 million in estimated new revenue for the committee. He said $203.7 million would be spent on capital improvement projects and collateral to borrow more money. The rest would pay for operations and maintenance, paying off outstanding debt and replenishing dwindling cash reserves.

Miller said the board doesn't have enough money on hand to handle another disaster, let alone one of Hurricane Katrina's caliber.

A report from the Bureau of Governmental Research released Wednesday differed from Miller's calculations, but came to the same end. "The conclusion of the research is inescapable that the proposed rate increases are necessary," BGR Executive Director Janet Howard told the Budget Committee.

Councilwomen Hedge-Morrell, Diana Bajoie and Susan Guidry asked that the S&WB find ways to ease the rate increases' burden on residents living on fixed incomes. S&WB Executive Director Marcia St. Martin said plans were in the works to bolster the water board's assistance program for poor residents by either increasing discounts or making their pipes run more efficiently.

Hedge-Morrell also demanded that the water board hire half its future contractors from New Orleans and that 35 percent consist of minority- or women-owned companies. "That's supposed to be our aim and you need to adhere to that," she said.

The freewheeling discussion went on so long that the Budget Committee delayed a separate vote on a proposal to increase Entergy franchise fees. As Clarkson tried to wrap up the meeting, Head's eyes welled up and her voice cracked as she asked for more time to ask more questions.